Mary Jo White and the Revolving Door

By Sam Mamudi

EPA

Too cosy?

In my piece last week about President Obama’s nominee for Chairman of the Securities and Exchange Commission, I mentioned Mary Jo White’s recent past as a white collar defense lawyer in passing, but it’s something I wish I’d spent more time writing about.

Thankfully, Matt Taibbi was around to more than make up for my omission. Highlighting one incident from her career at law firm Debevoise & Plimpton, that of squelching a possible insider trading case against future Morgan Stanley (MS) CEO John Mack, Tabbi writes:

If Barack Obama wanted to send a signal that he’s getting tougher on Wall Street, he sure picked a funny way to do it, nominating the woman who helped John Mack get off on the slam-dunkiest insider trading case ever to cross an SEC investigator’s desk.

When I contacted Gary [Aguirre, former SEC investigator] today, his take on it was simple. “Obama is not going to clean up financial corruption,” he said, “by pinning a sheriff’s badge on Wall Street’s protector-in-chief.”

Of course, some readers may argue that if anyone was going to take issue with White’s nomination it’d be Taibbi — he even acknowledges that many people dispute his characterization of her.

True enough, but what about Andrew Ross Sorkin? The New York Times reporter/editor and CNBC personality is about the farthest thing you can find from a Wall Street critic these days, but even he airs some reservations:

While Ms. White is a decorated prosecutor, she has spent the last decade vigorously defending — and billing by the hour — Wall Street’s biggest banks, as a rainmaking partner at the white-shoe law firm Debevoise & Plimpton. The average partner at the firm was paid $2.1 million a year, according to American Lawyer; but she was no average partner, very likely being paid at least double that. Her husband, John W. White, is a corporate partner at Cravath, Swaine & Moore. He counts JPMorgan Chase, Credit Suisse and UBS as clients. The average partner at Cravath makes $3.1 million. He, too, was a former official at the S.E.C. — he left Cravath to run the corporate division of the S.E.C. starting in 2006 just in time for the run-up to the financial crisis. He left in November 2008, a month after the bank bailouts, to return to Cravath.

It seems Mr. and Ms. White have made a fine art of the revolving door between government and private practice.

Sorkin goes on to list many of White’s former clients, including JPMorgan Chase (JPM) and Bank of America‘s (BAC) former CEO Ken Lewis; he notes she may have to recuse herself from some SEC cases.

As I wrote last week, it could be that White’s experience as a prosecutor and her background in litigation will help push the SEC into taking more cases to trial rather than settling in so many instances. And whatever her recent past, it’s a fact that she was a highly-respected and effective public prosecutor, a role and a responsibility she likely hasn’t forgotten.

“I believe she is one of those people who will understand that her public role will be very, very different than her role as a defense lawyer,” Dennis M. Kelleher of Better Markets, a watchdog group, told me. “I don’t think she’s going to be like so many others who don’t get that they have a very different role when they hold high public office.

I hope Kelleher’s right, but as I wrote in a different context, I can’t believe that the Obama administration couldn’t find a nominee who hasn’t been on Wall Street’s payroll. I’m not sure what’s worse: Whether White’s nomination says something damning about the President and his advisers, or if it simply reflects the incestuous nature of our financial, political and regulatory systems.

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FEBRUARY 6, 2013 1:15 A.M.

Dominic Lahar wrote:

" I’m not sure what’s worse: Whether White’s nomination says something damning about the President and his advisers, or if it simply reflects the incestuous nature of our financial, political and regulatory systems."

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